OSHA Policy on Safety Incentives Makes Waves

Some employers have voiced opposition to a new directive from the Occupational Safety and Health Administration (OSHA) that discourages employers from judging safety program effectiveness primarily by counting recordable injuries, and using monetary incentives to reward employees with good safety records. But OSHA is forging ahead with the plan anyway, said Deputy Assistant Secretary of Labor Jordan Barab.

Barab spoke Nov. 15, 2012, before the National Advisory Committee on Occupational Safety and Health, a group tasked with measuring the effectiveness of OSHA’s strategies and programs. He said that “employers have explained their objections to the directive, but none of those reasons is that it doesn’t improve safety and health.” OSHA has asked these employers to provide statistics or studies to show that rate-based incentive programs improve safety and health, but none has, according to Barab.

OSHA’s Employer Safety Incentive and Disincentive Policies and Practices memo was issued March 12, 2012. Barab reported that OSHA’s regional directors have been asked to encourage companies to make changes to their incentive programs based on the voluntary policy.

The directive stated that some employers establish programs that unintentionally or intentionally push employees not to report injuries. For example, an employer might enter all employees who have not been injured in the previous year in a drawing to win a prize, or a team of employees might be awarded a bonus if no one from the team is injured over a period of time.

“Such programs might be well-intentioned efforts by employers to encourage their workers to use safe practices. However, there are better ways to encourage safe work practices, such as incentives that promote worker participation in safety-related activities, such as identifying hazards or participating in investigations of injuries, incidents or near misses,” the memo reads.

OSHA’s Voluntary Protection Programs (VPP) Guidance materials suggest providing incentives to workers serving on safety and health committees, offering modest rewards for suggesting ways to strengthen safety and health, or throwing a recognition party at the successful completion of companywide safety and health training.

“Instead of rewarding teams for not having any injuries, OSHA advises rewarding them for adopting sound safety practices, such as always wearing protective gear, or attending safety meetings,” said Barab.

A number of companies have agreed to voluntarily rescind rate-based incentive programs or change them, Barab told the committee. This includes dozens of companies within the VPP that have rescinded rate-based programs as a condition of their annual recertification process.

One company was terminated from the VPP, because it refused to rescind its program. A small number of other companies have withdrawn voluntarily from the VPP, instead of giving up their programs, Barab said.

Recent Cases

Not many enforcement cases have been tied to incentive programs directly, Barab reported, but there have been a couple of recent examples where misreporting of illnesses and injuries were noteworthy. For example:In November 2012, the U.S. Department of Labor settled with Exel Inc., a subcontractor for chocolate-maker Hershey, over federal wage and hour and safety and health violations found at a warehouse facility in Palmyra, Pa. The settlement included commitments by Exel to revise its corporatewide incentive program to eliminate incentive payments based on the number of reported or recorded injuries and illnesses at all of its 300 U.S.-based facilities.

“We are pleased that Exel has agreed to revamp its injury and illness recordkeeping program and to change its incentive program,” said Assistant Secretary of Labor for OSHA David Michaels in a press release. “When workers don’t feel free to report injuries or illnesses, the employer’s entire workforce is put at risk.”

Also in November, a federal jury in Chattanooga, Tenn., convicted the former safety manager of Stone & Webster Construction on eight counts of fraud for falsifying safety records at three Tennessee Valley Authority nuclear power plants in order to collect more than $2.5 million in safety bonuses.

The jury found that the bonuses were paid for meeting certain performance goals, including one tied to worker safety, which was determined by workplace injury rates, as well as the total number of injuries at each of the three nuclear facilities. When workers’ injuries—which included broken bones, torn ligaments, hernias, lacerations, and shoulder, back and knee injuries—jeopardized the bonuses, the safety manager fraudulently misclassified them as nonrecordable, non-lost-time, and nonwork-related incidents.

Whistle-Blowing Enforcement Ramifications

Incentive programs that discourage employees from reporting their injuries are problematic under OSHA’s whistle-blowing regulation, as well, as the agency has warned employers that reporting an injury is always a protected activity and retaliation against an employee on the basis of reporting recordable injuries is a serious violation.

“This topic is going to attract a lot of attention under the new administration, because it is ramping up its whistle-blowing enforcement agenda,” said Mark Lies, a partner in Seyfarth Shaw’s Chicago office.

“OSHA considers employees’ reporting of injuries and illnesses to be protected activity, and incentives that may affect the reporting of injuries and illnesses will be viewed in at least two ways: Did [employers] discourage or otherwise intimidate employees from reporting; and once the employee reports, was the employee subjected to adverse action, because the employee did report it,” Lies told SHRM Online.

Lies said he has seen many situations where employees report injuries and illnesses, as required, and then the employer investigates the underlying accident that gave rise to the injury or illness and determines that it was a violation of a safety or health policy and disciplines the employee for the violation. “When the employee receives the discipline, he claims that it was retaliation for engaging in protected activity and not for the safety violation. The employee attempts to use the incentive policy as evidence that the employer will retaliate if employees report injuries and illnesses.”

Lies suggested adding a nonretaliation clause to an employer’s incentive policy, as well as adding other types of incentives that are not based upon injury and illness rates, such as awards for making safety suggestions, attending safety committee meetings and identifying hazards.

Roy Maurer is an online editor/manager for SHRM.

Follow him on Twitter @SHRMRoy.

Related Article:

OSHA Targets Safety Incentive Programs, SHRM Online Safety & Security, March 2012

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